An increase in the basic VAT rate in Russia from 18 to 20% may lead to an increase in the retail price of champagne, the Prime agency reports , citing Alan Sokolov, director of the Association of Sparkling Wine Producers. The increased tax rate came into effect on January 1.

“That is, on the shelf this percentage will be from 5 to 10%, depending on the appetites of distributors and retail, how much they mark up,” the agency’s interlocutor warned.

Previously, the director of the Association of Manufacturers and Suppliers of Food Products Rusprodsoyuz, Dmitry Vostrikov, warned that an increase in VAT in combination with other factors could lead to an increase in consumer prices for food in the first quarter of 2019 by 8%. He said that consumers will see price changes on shelves only in one to two months, since negotiations on price changes take at least 30 days, and before the new year, many retailers have a moratorium on accepting new price lists from suppliers.

Vostrikov emphasized that increasing the VAT rate to 20% will affect not only the selling prices of products, but also the cost of raw materials, equipment, and packaging. “This is a tax that is levied along the entire production chain. Therefore, analysts believe that the change in VAT results in a 4 to 12% increase in costs,” he said.

According to Rosstat, inflation in Russia at the end of last year was 4.3%. Food products rose in price by 4.7% in 2018, and prices for alcoholic beverages increased by 1.3%, the department specified.

Manufacturers admitted the possibility of rising prices for champagne due to an increase in VAT